The limits of economic approach.
The importance of the effort made in the Kyoto protocol is often subject of controversy. But, as economist
Roger Guesnerie (2002) puts it, "good reasons to estimate that Kyoto does to much or to little don't make a definite demonstration". Even if new scientific data brought up by the 2007 IPCC Report show very clearly the sources for worry, Guesnerie's statement reminds us that the Kyoto protocol was a reasonable compromise, although it is still not enough.
A compromise in itself, is a result of negotiations and political considerations that are not the equivalent of the very rationality of general interest.
Moreover, the economic reasoning bears its own difficulties, based on its own methodology: confronted with unprecedented risks, and with upcoming new climatic phenomenons, reasoning models in context of uncertain future show their limits. There again, says R. Guesnerie, "No surprise that an issue affecting the survival of human kind, or at least the integrity of "Spaceship Earth" that harbors it, has dimensions the assessment of which cannot be comprehended only by technical discussion of choices on the basis of economic rationality."
Let us now recall the basis of Kyoto.
The basis of Kyoto.
The principle of the Kyoto Protocol is to restrict greenhouse gases emissions. It is based on a system of national greenhouse gases emission quotas
that wera agree upon after negotiations. The goal is to reduce the annual emissions of GHG of signatory countries of -5% compared to the level of 1990. One of its virtues is to define clearly the distribution of the effort. It would be too rigid for states as regards implementation difficulties, if flexibility mechanisms had not been introduced. The most important of these mechanisms is the establishment of a market for Negotiated Emission Permits, that aims at shaping a de facto international price of carbon. Thus, each party can decide on the strategy that seems most profitable: reducing enough its carbon emissions and selling the excess allocated permits to other parties, or to buy those of others - in case of overrun of quotas- at the price determined by the market for the ton of CO2.
This mechanism has the objective of diminishing the overall cost for GHG emissions abatements.